Amazon founder and CEO Jeff Bezos in his latest letter to shareholders spoke extensively about wealth creation and how that money has helped people in "college, for emergencies, for houses, for vacations, to start their own business, for charity". He said not only money, Amazon helps people save a lot of time too. He said that using Amazon delivery services saves people more than 75 hours a year. This letter to shareholders is Bezos' last as he is slated to step down later this year.
"We offer low prices, vast selection, and fast delivery, but imagine we ignore all of that for the purpose of this estimate and value only one thing: we save customers time," said Bezos in the letter. He added that Amazon customers complete 28 per cent of their purchases on their platform in three minutes or less and half of all purchases are finished in less than 15 minutes.
"Compare that to the typical shopping trip to a physical store - driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that's more than 75 hours a year saved," said the Amazon CEO. He added that everyone's busy in the early 21st century.
Bezos said if we put a dollar figure we can estimate the value creation in that time. "So that we can get a dollar figure, let's value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation," said Bezos.
The CEO in his letter also spoke about creating more than consuming. "If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn't create value for those it touches, even if it appears successful on the surface, isn't long for this world. It's on the way out," said Bezos.
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